Sunday, December 07, 2008

Tribune Goes To Zell In a Handbasket

UPDATE 12/8, 2:25 P.M. TRIBUNE GOES CHAPTER 11--AND SO IT BEGINS

Likely Bankruptcy Filing Hardly A Shocker; What's More Surprising is What Took So Long

When I last pondered in August the fate of Tribune, I continued to marvel over the lingering state of denial in which Sam Zell and his gang of sycophants were living in. Nobody really wanted to talk seriously about how the company was going to start paying down nearly $13 billion in debt, including $512 million due in June.

But the real reason was simple: they didn't have the foggiest idea. After all, you can't simply satisfy your bankers by selling assets, especially when many of them are worth less each day (read newspaper division).

Now they're starting to wake up from their idea coma (sorry, Lee Abrams) and find that reality does indeed bite. That's why various news organizations, including Tribune's flagships The Chicago Tribune and The Los Angeles Times, are reporting tonight the likelihood Tribune will go Chapter 11.

Actually, they weren't the ones who broke the news of their own twisted fate. The Wall Street Journal , where I'm sure Rupert Murdoch is gloating at least a little, gets props for that. But in the end, it's the only real solution at hand. When you owe as much as Tribune does, and your cash flow is choking more than the Cubs did in the playoffs, then you need a bankruptcy court trustee to act as a white knight.

But even if the company emerges from bankruptcy with a balance sheet that shows some signs of life, that doesn't mean its employees should start whistling "Happy Days Are Here Again." All of the properties will have to downsize even more than they have -- if that's even possible. Luxuries like bureaus, badly needed upgrades for digital media and staff critics could become a thing of the past. Ditto for any real reason to read the papers.

And the death spiral continues.

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